AXA Real Estate buys two supermarkets for UK Long Lease Property Fund

AXA Real Estate has made the first acquisitions for UK Long Lease Property Fund with the £38 mln (€45 mln) purchase of two supermarkets.

The acquisitions, which come shortly after AXA Real Estate’s launch of the new, open-ended UK Long Lease Property Fund, having raised an initial £125 mln, are in line with the fund’s strategy of building a core portfolio of UK long lease assets, with a focus on strong property fundamentals, by targeting investments across a range of sectors from traditional to more alternative assets.

AXA Real Estate said it expects this strategy to generate long-term, stable income streams often with inflation indexation for institutional investors that are looking for investments with liabilit- matching attributes, in particular pension schemes. AXA Real Estate is targeting a total fund size of around £1 bn in five years.

The fund has acquired a supermarket let to Waitrose on an unexpired lease term of over 27 years. The asset in Sevenoaks, Kent, was bought for £11.5 mln. AXA Real Estate has also acquired a 56,800 sq ft (5,300 m2) supermarket in Mickleover for £26.3 mln in an off-market sale and leaseback agreement with Tesco. The property is let to Tesco on a new 25-year lease. DTZ acted for AXA Real Estate and Morgan Williams acted for Tesco.

John Osborn, fund manager – UK Long Lease Property Fund at AXA Real Estate said 'both of the assets fit precisely into the fund’s strategy of investing in properties with strong property fundamentals that are capable of generating secure, long-term income streams with rental uplifts.'

He added: 'We have a strong pipeline of suitable investment opportunities across a broad range of sectors which we are currently assessing, while, in parallel, we continue to expand the fund’s investor base.'